For self-employed, saving for retirement is a big challenge

More than eight in 10 of the self-employed have had to reduce or “pause” their retirement savings contributions.

Seven in 10 self-employed people aren’t saving regularly for retirement or aren’t saving at all.

That’s according to a TD Ameritradereport on the retirement savings habits of self-employed Americans. Completed in October and conducted in collaboration with Head Research, a unit of Head Solutions Group, the survey polled 1,507 self-employed individuals and 500 people among the traditionally employed.

A still greater majority of the self-employed who are saving for retirement — 83 percent — have had to reduce or “pause” their retirement savings contributions at one time or another, the report reveals. This compares with 70 percent of traditionally employed people who have done so.

The survey points to the following challenges the self-employed face in saving for retirement:

More than 10 million Americans work for themselves, according to TD Ameritrade. Since 2001, the number of self-employed individuals has increased by more than 14 percent.

“For entrepreneurs there needs to be a balance between investing in the business today and investing in their future financial well-being,” says Lule Demmissie, managing director of retirement at TD Ameritrade. “When you’re self-employed, the temptation is to think that the business will grow enough that you won’t need to save today.

“But, you don’t know when the next payout is coming and you also don’t want to forfeit the power of tax-free compounded growth in vehicles like an IRA,” she adds. “Having a retirement plan in place with regular saving is doubly important.”

The report notes that only about 30 percent of people who save regularly have a retirement savings goal in mind. Among the self-employed, only 8 percent regularly have a fixed amount deducted from their paycheck. This compares with 53 percent among the traditionally employed.

Relative to the traditionally employed, a smaller proportion of the self-employed also regularly set aside a fixed amount for retirement after getting paid (10 percent versus 15 percent). However, more of the self-employed: